Oxford Journal of Scientific Research

Running head: CASE 2 LEASING CASE
Case 2: Leasing Case
Name of the Student:
Name of the University:
Author Note

1CASE 2 LEASING CASE
Table of Contents
Answer 1:...................................................................................................................................2
Answer 2:...................................................................................................................................2
Answer 3:...................................................................................................................................3
Answer 4:...................................................................................................................................3
Answer 5:...................................................................................................................................4
Answer 6:...................................................................................................................................4
Answer 7:...................................................................................................................................4
Answer 8:...................................................................................................................................4
Answer 9:...................................................................................................................................5
Answer 10:.................................................................................................................................5
Answer 11:.................................................................................................................................5
Answer 12:.................................................................................................................................5
References:.................................................................................................................................6

2CASE 2 LEASING CASE
Answer 1:
The two basic types of leases that are used are financial leases and operating leases.
Under both the lease conditions, there are some differences, which make them apart and
allow the company to make appropriate decisions regarding the lease requirements. Financial
lease is considered to be a long-term lease and the lessee, which aim in paying much more
than the cost of the property or equipment. In the similar process, operating lease is mainly
used for a specific period, where the lessor bears the risk of obsolescence and incidental risks.
Moreover, under operating lease lessor bears all the relevant expenses, while not realizing the
full cost of the asset (Orlova and Afonin 2015). Furthermore, the specialised services are
mainly provided by the lessor.
The major difference between the two basic types of leases is depicted as follows.
 Finance lease have asset is exclusively for the use of a particular lessee, which is not
possible in operating lease.
 Operating lease period may not stretch over the entire economic life of the asset, while
financial lease does.
 Financial lessee has option to purchase the equipment at the end, whereas operating lease
does not
 Financial lease period is non-cancellable, while operating lease option is cancellable.
Answer 2:
The lease option has a provision for buyout after the end of the lease period.
However, lease is for short duration, while NRC will be responsible for maintenance and
insurance expenses, which makes it an Operating Lease (Neboian and Spinler 2015).